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Explain Potential For Growth Internally And Externally. In Business?

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Greg Allen Profile
Greg Allen answered
The potential for growth internally and externally in business is usually laid out in a business plan. A business plan is drawn up by a business at the outset and should explain the direction the business is looking to move in, as well as the financial elements of it. This can include capital in the business, projected sales and purchases, and the description of the growth that a business foresees.

• Internal growth

This is the strategy that is put into place to develop the business itself. The business will invest in growth in a number of ways including training employees, the restructuring of departments and improving products and services. By improving products and services, a business will look to extend their customer base. Internal growth will inevitably cost money in the short-term, but the returns on these investments should outweigh the money spent over time. The business size will not necessarily increase because of internal growth, but the quality of the business will.

• External growth

An external growth strategy will assist in developing the size of the company and the value of the assets of it. Examples of external growth are to franchise the business, leading to more costs, but inevitably more profit, and increasing the interaction between the business and other companies for a mutual benefit. The number of business partners a company has will have a bearing on the amount of money that is invested, and by attracting investment from external sources the company will have more potential to grow. External growth should be considered by all successful businesses as they provide the opportunity for the business to produce substantial returns on investment into the company.
Natasha Boyce Profile
Natasha Boyce answered
Potential for growth internally and externally. In a salon
Robert Lamp Profile
Robert Lamp answered

External Growth of aBusiness

There are many potential advantages:

  • Faster speed of access to new product or market areas
  • Increased market share / increased market power
  • Access internal economies of scale (perhaps by combining production capacity)
  • Secure better distribution channels / control of supplies
  • Acquire intangible assets (brands, patents, trademarks)
  • Overcome barriers to entry to target new markets
  • Defend a business against a takeover threat
  • Enter new segments of an existing market
  • To take advantage of deregulation in an industry / market

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